US taxes after death: what happens to your US taxes when you die?

US taxes after death can involve a final individual tax return, a separate estate income tax return, and, for larger estates, federal estate tax.

Published on: September 08, 2026
Written by: Clark Stott

easiest countries to move to from the usa

In this article

US taxes after death at a glance

Tax issue	Main form	Who generally files?	Key 2025 rule
Final individual tax return	Form 1040 or 1040-SR	Executor, personal representative, or qualifying surviving spouse	Reports income through the date of death
Estate income tax	Form 1041	Executor or estate fiduciary	Generally required if a domestic estate has US$600 or more of gross income
Federal estate tax	Form 706	Executor	2025 basic exclusion amount: US$13.99 million

Death ends a taxpayer’s individual tax year, but it does not automatically end their US tax responsibilities. Someone still has to deal with the income earned before death, any income the estate earns afterward, outstanding returns or tax debts, and potentially the transfer of the deceased person’s assets.

Who is responsible for US taxes after death?

An executor, administrator, or other personal representative generally takes over responsibility for handling the deceased person’s tax affairs.

The IRS refers to someone acting on behalf of another taxpayer in this capacity as a fiduciary. This can include an executor, administrator, trustee, or personal representative. The fiduciary may need to file returns, pay taxes due, communicate with the IRS, and manage tax matters while the estate is being administered.

Form 56, Notice Concerning Fiduciary Relationship, is used to notify the IRS that this relationship has been created. In practical terms, it tells the IRS that the fiduciary has assumed responsibility for acting on behalf of the deceased taxpayer or estate.

What documents may an executor need?

When requesting a deceased taxpayer’s information, the representative should generally provide the deceased person’s full name, last address, and Social Security number, a copy of the death certificate, and either court-approved Letters Testamentary or Form 56. A court-appointed fiduciary should include current Letters Testamentary or a court certificate with Form 56.

A tax provider may request additional information for identity and security checks, such as:

Government-issued photo ID for the executor
Executor’s address and contact details
Date of death
A signed request confirming that the person is acting as executor
Court-issued evidence of the executor’s appointment

Those additional items should not be confused with a universal IRS checklist. Different tax firms, banks, courts, and financial institutions can have their own verification procedures.

Does someone still need to file your final US tax return?

Yes. If the deceased person was required to file, their executor or personal representative generally files a final Form 1040 or, if the deceased person was eligible to use it, Form 1040-SR.

The IRS says the final return is generally prepared in much the same way as if the taxpayer were still alive. It reports income through the date of death and can claim eligible deductions and credits.

Suppose an American living in Australia died on September 15, 2025. Their final individual tax return would generally cover January 1 through September 15, 2025, and the 2025 return would ordinarily be filed in 2026.

A surviving spouse may also be able to file a joint return for the year of death when the applicable requirements are met. When an executor is handling the filing, they generally sign or authorize the return in their fiduciary capacity.

The distinction between the different returns is worth getting clear early:

Table 1: Which US tax return applies after death?

Tax situation	Who generally reports it?	Main form
Income attributable to the period before death	Deceased taxpayer	Form 1040
Income earned by the estate after death	Estate	Form 1041
Federal estate tax, when applicable	Estate	Form 706

Note: The final Form 1040 and the estate’s Form 1041 are not the same return. The IRS specifically treats the deceased person’s estate as a separate taxable entity.

What income goes on the final US tax return?

The final Form 1040 generally reports income the deceased taxpayer received, or was considered to have received, before death. Depending on the person’s circumstances, that could include:

Salary and wages
Interest
Dividends
Pension income
Rental income
Investment income
Self-employment or business income

Timing can become surprisingly important. A payment connected with the deceased person but received after death does not automatically belong on the final Form 1040. Some amounts can instead be treated under special rules for income in respect of a decedent or become income of the estate.

For a straightforward scenario, however, the useful dividing line is simple: first identify income belonging to the person before death, then separately identify what arises after death.

What happens to income earned after death?

Income generated by estate assets after the taxpayer dies may be taxable to the estate rather than reported on the deceased person’s final Form 1040.

Once someone dies, their estate can become a separate taxpayer. Assets such as savings accounts, shares, bonds, mutual funds, and rental property may continue producing income while the executor administers the estate.

A domestic estate generally must file Form 1041 when it has US$600 or more of gross income during its tax year. A filing can also be required regardless of that amount if the estate has a nonresident alien beneficiary.

For example:

A US citizen who dies in September while owning a rental property. Rent attributable to the period before death may belong on the final individual return. Rent generated while the estate owns the property can instead become income of the estate.

That separation, Form 1040 before death and potentially Form 1041 afterward, is one of the most important parts of understanding US taxes after death.

Does your estate have to pay federal estate tax?

Most estates will not owe federal estate tax, but estates above the applicable threshold may need to file Form 706.

For someone who died during 2025, the federal basic exclusion amount is US$13.99 million. Form 706 is generally required when the deceased US citizen or resident’s gross estate, plus adjusted taxable gifts and applicable specific exemption amounts, exceeds that threshold.

The federal estate tax rate schedule reaches 40%, although the actual estate tax calculation involves deductions, credits, previous taxable gifts, and other adjustments rather than simply applying 40% to the estate’s total value.

Form 706 can also be relevant below the normal filing threshold when an executor wants to elect portability, allowing a surviving spouse to potentially use the deceased spouse’s unused exclusion amount.

When is Form 706 due?

Form 706 is generally due nine months after the date of death, and an extension to file may be available.

Note: The basic exclusion rises to US$15 million for deaths occurring in 2026. That does not change the threshold for someone who died in 2025 simply because their estate return is being prepared in 2026.

Does US estate tax include foreign property?

Yes. A US citizen’s federal gross estate can generally include assets located anywhere in the world, not just assets in the United States. The IRS states that US citizens are subject to US estate taxation on their worldwide assets, even when they are not US residents.

The estate might therefore include assets such as:

A family home overseas
Foreign rental property
Bank and brokerage accounts
Shares in foreign companies
Foreign retirement accounts or pensions
Certain life insurance interests
Trust interests
Other investments held outside the US

The Form 706 instructions specifically state that the gross estate can include property outside the United States, along with certain annuities, jointly owned assets, life insurance proceeds, digital assets, and other interests.

So, a US Citizen living permanently in London, Sydney, Amsterdam, or Dubai should not assume that an overseas home or investment portfolio sits outside the US estate tax system simply because the assets are foreign.

What happens to foreign accounts and investments after death?

Foreign financial reporting can remain relevant for the deceased taxpayer’s final filing period and for assets subsequently held by the estate.

Form 8938 reporting:

IRS instructions illustrate that when a calendar-year taxpayer dies during the year, the reporting period ends on the date of death. In other words, relevant specified foreign financial assets may still need to be considered on the final income tax return.

FBAR (Report of Foreign Bank and Financial Accounts):

An FBAR obligation does not automatically disappear when someone dies. The executor or other representative should determine whether an FBAR remains due for the deceased person. The estate or person who takes ownership of the accounts may then have a separate FBAR obligation if the normal requirements are met.

Foreign account reporting by the estate:

Meanwhile, an estate itself can have foreign account reporting requirements. The 2025 Form 1041 instructions specifically ask about foreign financial accounts and direct qualifying estates and trusts to file an FBAR when the requirements are met.

Other foreign asset reporting requirements:

Foreign pensions, trusts, corporations, mutual funds, and similar structures can create further reporting questions. Rather than assuming every international form disappears at death, the executor should review what the taxpayer owned and what reporting applied before and after the date of death.

Can both the US and another country tax the estate?

Yes. An American abroad can potentially encounter US federal estate tax as well as inheritance, estate, succession, or similar taxes in another country.

The US looks at a citizen’s worldwide estate. At the same time, the country where the person lived or where a particular property is located may have its own rules when someone dies. The result can be overlapping taxing rights.

There are mechanisms that may reduce double taxation, including estate and gift tax treaties. The IRS lists estate or estate-and-gift tax treaty arrangements with countries including:

Australia
Canada
France
Germany
Italy
The Netherlands
Switzerland
United Kingdom

Treaty treatment varies considerably. An ordinary income tax treaty also should not automatically be assumed to provide the same death-tax relief as an estate treaty. For cross-border estates, that distinction is easy to miss and can matter more than it first appears.What happens if the deceased person had unpaid or unfiled US taxes?

What happens if the deceased person had unpaid US taxes or unfiled US tax returns?

Unfiled returns and outstanding federal tax debts generally do not vanish when the taxpayer dies. The executor may need to address them while administering the estate.

The IRS specifically says that if the deceased person failed to file individual income tax returns for earlier years, the representative may have to file those returns. Any balance due on the final return or prior returns also needs to be dealt with.

For expats, this can surface an uncomfortable problem. Someone may have paid tax in their country of residence for decades and assumed there was no US filing requirement because no additional US tax was owed. Their executor can then discover missing returns or foreign reporting obligations while trying to settle the estate.

Whether tax is ultimately owed will depend on the facts, foreign tax credits, exclusions, treaties, and the type of income involved. Filing compliance and tax liability are not necessarily the same thing.

Can the IRS collect unpaid taxes from beneficiaries?

Federal tax liabilities generally need to be addressed before an estate is fully distributed, and transferring assets too early can create additional exposure. The IRS states specifically that unpaid estate tax may, under transferee-liability rules, be collected from a person who receives a distribution of the deceased person’s property.

That is one reason executors should be cautious about distributing all estate assets before they understand what federal tax filings and liabilities remain.

Do beneficiaries pay US tax when they inherit assets?

In most cases, receiving property as an inheritance is not itself included in the beneficiary’s federal taxable income, but income or gains from the inherited property can be taxable later.

If someone inherits a rental property, for example, the property itself is generally not ordinary taxable income. Future rent is taxable. The same principle applies to inherited investments that later generate interest or dividends.

Table 2: When can an inheritance create US tax?

Event	General US federal income tax treatment
Receiving inherited cash	Usually not taxable income
Receiving inherited property	Usually no immediate federal income tax
Earning rent from inherited property	Usually taxable
Earning interest or dividends afterward	Usually taxable
Selling inherited property for a gain	May create capital gains tax

Basis is particularly important when inherited property is eventually sold. Generally, the basis of inherited property is its fair market value on the date of death, although alternate valuation and other special rules can apply.

That can produce a very different capital gain from simply carrying over what the deceased person originally paid for the asset.

What should US expats prepare before death?

Keeping clear US and foreign financial records can make the executor’s job considerably easier and reduce uncertainty when a cross-border estate has to be administered.

Useful records include:

Recent US income tax returns
Details of US and foreign bank and brokerage accounts
Property purchase and valuation records
Pension and retirement account information
Company and trust ownership records
Details of major lifetime gifts
Contact information for US and local tax advisors
Will and executor documentation
Details of any outstanding or unfiled US tax years

There is a practical point here that is easy to underestimate. An executor cannot efficiently deal with an overseas pension, an Australian investment property, a US brokerage account, and several years of tax records if nobody knows where the documents are.

For US expats in particular, estate planning is often a cross-border, multi-jurisdiction exercise. US federal tax rules may apply alongside the probate, inheritance, and tax laws of the country where the person lived.

What happens if the deceased was already working with a US tax provider?

A tax provider will generally need evidence of the taxpayer’s death and the executor’s authority before allowing the executor to take over the deceased client’s tax affairs. Once that authority has been established, the executor can typically provide the information needed to prepare the final return, supply supporting documents, review the tax filing, and sign or authorize it in their capacity as executor.

Where appropriate, Form 56 can also be filed to establish the fiduciary relationship with the IRS. The IRS requires court-appointed executors filing Form 56 to be prepared to substantiate their authority, and current instructions describe when court documentation such as Letters Testamentary should be attached.

Frequently Asked Questions

Does the IRS need a copy of the death certificate with the final tax return?

Usually, no. A death certificate generally should not be attached to the deceased person’s final Form 1040 unless the IRS specifically requests it.

The executor should still keep a certified copy available. It may be needed when requesting the deceased person’s tax information, proving authority to act, or dealing with other institutions during estate administration.

Can a surviving spouse still use the deceased spouse’s unused estate tax exemption?

Potentially, yes, through the federal estate tax portability rules. An executor can generally elect portability by filing Form 706 so that a surviving spouse may use the deceased spouse’s unused exclusion amount. This can matter even when the deceased person’s estate is below the normal Form 706 filing threshold.

There are special rules and deadlines for making the election, so estates that appear too small to owe federal estate tax should not automatically assume Form 706 has no value.

Can the estate choose a tax year that is different from the calendar year?

Yes. Unlike an individual taxpayer, an estate can generally choose a fiscal tax year ending on the last day of a month, provided the first tax year does not exceed 12 months. That flexibility can affect when estate income is reported and when Form 1041 is due. It can also be useful when administration spans more than one calendar year.

What happens to a tax refund owed to someone who has died?

A refund due on the deceased person’s final return can generally still be claimed by the appropriate representative. If someone other than a surviving spouse filing a joint return is claiming the refund, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, may be required. Certain court-appointed personal representatives can be exempt from filing Form 1310 if the required documentation is provided.

Can a deceased US citizen still qualify for foreign tax credits on the final return?

Yes, when the normal Foreign Tax Credit requirements are met, foreign income taxes attributable to the deceased person’s final tax period may still affect the final US tax return.

This can be especially relevant for expats who paid income tax in their country of residence before death. The exact treatment depends on when the foreign tax accrued or was paid, the type of income involved, and the credit limitation rules.

Does dying abroad change where the final US tax return is filed?

No. Dying abroad does not change the type of final individual return that must be filed. However, the mailing address for a paper return can depend on whether the return shows a foreign address, whether a payment is enclosed, and the delivery method used. Check the current Form 1040 and 1040-SR instructions before mailing the return.

Prefer to talk it through? Schedule your free callback today.

BOOK MY FREE CALL

Clark Stott has been with Expat Tax Online since 2015. Being a dual national based in the UK, Clark has unique experience helping US citizens (and Accidental Americans) become tax compliant via the Streamlined Tax Amnesty program. Clark likes to help Americans in the UK keep their tax situations as simple as possible to avoid harsh IRS treatment.